- Professional News
- 30 April 2014
Publication of the 7th Licensing Round in the North Sea
The Danish Energy Agency has published the terms of the 7th Licensing Round for hydrocarbons licences in the North Sea. Interested companies must file their applications for licences on or before 20 October 2014.
The Danish Energy Agency has published the terms governing the application for licences for the exploration for and production of oil and gas from new areas in the North Sea. The areas in question are located in the Central Graben and in the areas to the east of the Central Graben.
The Danish Energy Agency has indicated that future licensing rounds will take place at one year intervals calculated as from the end of the 7th Licensing Round. The reason is that the applicants will benefit from the new licensing rounds consequently becoming more predictable.
Terms of the 7th Licensing Round
The proposed financial terms of the 7th Licensing Round are similar to those applicable to the 6th Licensing Round. This means, for example, that the licensees must pay Danish corporation tax and hydrocarbon tax of 25% and 52%, respectively.
Licences will be granted for an exploration period of six years entitling the licensees to a 30-year extension in respect of the fields in which production of oil or gas is commenced. The grant of licences is conditional upon the participants in the same licence entering into a joint operating agreement.
It is also a condition that the Danish North Sea Fund (Nordsøfonden) participates in the new licences on behalf of the Danish state with a 20% share. The percentage with which the oil and gas companies will participate in each licence will therefore be 80%.
The companies granted a licence must within 30 days provide the Danish Energy Agency with a guarantee for the fulfilment of their obligations under the licence.
Publication of model documents
The Danish Energy Agency has published a model licence, a model joint operating agreement (including Appendix A (accounting procedure)) and a model guarantee. The model licence is essentially identical with the model licence applied in the 6th Licensing Round, whereas the model joint operating agreement is essentially identical with the Danish Energy Agency's model joint operating agreement from February 2009.
Specification of model guarantee
The model guarantee, however, has been specified and amended on several points compared with the model guarantee previously published by the Danish Energy Agency on its website. The following new provisions have, for example, been incorporated:
- Fulfilment of requirements according to the guarantee
- Right of recourse and provision of security
- Financial capacity of the guarantor
- Assignment or transfer of the guarantee.
Applicants will be evaluated and selected on the basis of the criteria appearing from s. 12 a(1) of the Danish Subsoil Act (undergrundsloven). The criteria are as follows:
- The applicant's expertise
- The applicant's financial resources
- The quality and scope of the applicant's proposed working programme.
The decision of grant of licences will also take into consideration how the applicants have previously performed their activities under similar licences.
Deadline 20 October 2014
Applications for hydrocarbon licences in the relevant areas must be received by the Danish Energy Agency on or before 20 October 2014. The application fee amounts to DKK 25,000.
The hydrocarbon licences are expected to be granted at the beginning of 2015.
We offer advice on hydrocarbon licences, the Subsoil Act and the terms governing licensing rounds
Bech-Bruun has rendered advice to several applicants on hydrocarbon licences in connection with licensing rounds as well as open door procedures. We therefore have a solid basis for rendering advice on the 7th Licensing Round and on the requirements to be fulfilled by applicants in respect of the Subsoil Act and the terms governing the licensing round.
See the Danish Energy Agency’s press release
View the areas subject to the licensing round
Stay up to date via the Danish Energy Agency’s website about the 7th Licensing Round